How do I: know if I am ready to supply the foodservice market?
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- Ira Snow
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1 How do I: know if I am ready to supply the foodservice market? The foodservice market is both fast growing and dynamic. Unfortunately, it is also highly complex and fragmented (see How do I: Better understand the foodservice market). In order to enter this market, or grow an existing presence, you must: know the types of foodservice outlets you are targeting know the reasons your products and services will appeal to them know whether you are targeting local or national distribution have necessary resources in place know how you are going to communicate with your target market have established how you are going to develop sales to your own, and your customers, mutual advantage. This How Do I guide is designed to assist you assess how ready you are by identifying the resources you should have in place. By knowing where there are gaps you can plan how to address them. THE FOODSERVICE MARKET There is a detailed foodservice market map in the How Do I: Better understand the foodservice market? Guide: however, the 9 principal segments into which the market is most commonly divided are: Restaurants Quick Service Restaurants (fast food outlets) Pubs Hotels Leisure outlets Staff catering Healthcare Education Services Geographical Segmentation for the foodservice market is generally considered as: Local - the Local Authority region in which you are based Regional - Scotland National - all, or parts, of England, Wales, Northern Ireland Export - Ireland, the EU, Rest of Europe, Rest of the World. Segmenting the foodservice market as best fits your products should help to identify the types of foodservice outlets you wish to target and where they are located. This clarity then has a major influence on product development, selling and distribution strategies.
2 FOODSERVICE MARKET RESEARCH As mentioned earlier in this guide, knowing the types of foodservice outlets you will target and their needs in terms of products, distribution, support and promotion is essential. Effective pre-market entry research is crucial. You must also consider the maintenance of your research after market entry. As in most market research projects there are 2 types of methodology available - secondary and primary research - and 2 means to carry it out - DIY or using a professional market research agency. In most projects both secondary and primary research is necessary. Whether to do-it-yourself, or contract out, will depend on issues such as costs, in-house skills and access to information. Secondary research is a technique used to source background information (including target customer databases) about a market segment using existing resources. Useful information sources could include: the Internet: targeted foodservice operators' websites, online trade magazines, trade association websites and, of course, trade press: trade magazines don t, generally, publish their entire content online so it is a good idea to subscribe to titles read by your target market. Caterer & Hotelkeeper is a key weekly title. published market reports and directories: these are generally expensive to buy, but Scotland Food & Drink s Helpline service can offer access to some resources for no charge. See contact details at the end of this guide. contact network: other food and drink companies are often happy to share useful information. Use your own, existing contact network and/or attend trade forums, briefings, etc. to meet new contacts. The skill in carrying out secondary research is to identify relevant information; recognise its limitations (usually to do with generality and how up-to-date it is), then use it to design follow-up primary research. Primary research involves collecting information that is original and unique to you. The most common methods are: postal surveys - cheap, easy to do, but usually with low response rates. telephone surveys quick, more difficult to do than postal, but with better response rates and depth of information. face-to-face meetings - can be difficult to arrange, expensive, but best source of in-depth information. As well as formal meetings with buyers, useful information can also be achieved by informal visits to operators' premises to speak to chefs, unit managers and front of house staff about issues they feel could be addressed by a particular product / supplier solution. on-line surveys - quick, fairly cheap, good response rates, but most difficult to populate for contact. The questionnaire design can also require specialised software. The most successful primary research is the result of a good brief, a clearly defined target sample, carefully worded clear questions and the ability to analyse and present the gathered data in a clear and concise format. PRODUCT DEVELOPMENT AND DESIGN There are many things to consider in developing products for the foodservice market including: 1. Does your product address the foodservice operators priorities of price/quality/health? 2. Does your product provide solutions for foodservice operators - can you help customers with? cost savings skills shortages a need for reliability of supply creating points of difference for their end users / consumers menu extension or enhancement meeting the requirements of commercial kitchens, such as: withstanding industrial microwaves presenting under heat lamps being held hot in bain maries facilitating portion control on site storage
3 DISTRIBUTION INTO THE FOODSERVICE MARKET There are 2,500+ group operators and 200,000+ independent operators in the UK foodservice market. Knowing how you are going to cost effectively distribute to them is an essential area to research. The 4 principal methods of distribution to the foodservice market are: directly to foodservice operators (outlets) using your own vehicles directly to foodservice operators using the services of an external storage and haulage contractor by becoming a supplier to a foodservice wholesaler who stocks (takes ownership of) your products for ongoing sale to their network of foodservice operator customers whether local, regional or national by tapping into national distribution agreements already in place between larger foodservice operators and specialist foodservice distributors. Having a clear plan of how you are going to distribute your products to the foodservice market is essential. If you are going to try to recruit distributors or wholesalers, it is useful to have done market research or even some customer recruitment amongst the types of operators you have targeted. This gives you evidence of demand and a better platform to discuss pricing, volumes, promotional support, etc. A referral from a large operator to their agreed distributor is obviously a great start. However, your approach to the distributor will be most effective if you can provide clear evidence of market demand (from your market research). Self Assessment of the Assets Needed to Supply the Foodservice Market The following list of assets is segmented into: Structural assets organisational and tangible needs Human assets people skills and experience needed Relationship assets networking needs The idea is that you consider each need and decide whether your company is strong or weak in meeting each need, or whether or not, you think it is relevant. This assessment process might be carried out by yourself or, in collaboration, with your colleagues.
4 1. STRUCTURAL ASSETS ASSESSMENT Market knowledge Market segmentation Information capturing systems Developed products for foodservice Products compliance with cost / quality / health Products level of providing solutions Packaging developed Foodservice branding in place Pack sizes determined Storage instructions Usage instructions Nutritional information Shelf life information Pricing proposals Margin requirements Operating portion costs Production processes designed e-business systems in place Quality assurance systems Internal communications re foodservice Foodservice business plan in place Sales forecasts Cost forecasts Product launch planned Ongoing promotional plans in place Progress reviews scheduled Others 2. HUMAN ASSETS ASSESSMENT Sales people availability Foodservice selling skills Market research capability Foodservice training capability Internal knowledge dissemination Recruitment plans Matching new customers with relevant employees Others.. 3. RELATIONSHIP ASSETS ASSESSMENT Target customer database Distribution plans in place Customer recruitment plans and processes in place Customer loyalty development plans in place Supplier relationships in place Others....
5 NEXT STEPS The next steps are a matter for your judgement. Do you have sufficient strengths in place to make your approach to the foodservice market? Or, do you need to address some weaknesses first? It is not necessary to be strong in everything; some assets can be developed as sales activity progresses. Having said that, in most foodservice market development projects it is necessary to have adequate resources and perseverance. Success may well take longer than you first thought. Some food service operators will require suppliers to have industry accreditation in areas such as quality, safety and due dilligence. BRC Global Food (British Retail Consortium) and Safe and Local Supplier Approval (SALSA) are the most common. Food and drink companies are encouraged to find out more about these schemes and how to gain accreditation. SALSA - suitable for small food processing businesses supplying locally, such as start up food businesses: BRC - suitable for established food processing businesses seeking to distribute products nationally or internationally: OTHER USEFUL SOURCES OF INFORMATION: Visit - INSIGHTS: access relevant data sources available on markets, sectors, exports and more. - There are many other How Do I? Guides which can help you grow your business
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